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India’s Avenue Supermarts Ltd’s initial public offering (IPO) to raise up to Rs 1,870 crore was fully subscribed on the first day of the offer, exchange data showed on Wednesday. The supermarket operator operates 118 stores across 45 cities under the “D’Mart” brand. Its is the country’s biggest since PNB Housing Finance Ltd raised Rs 3,000 crore in an initial share sale in October. The supermarket operator is selling shares in a range of 295-299 rupees a share in an offer that closes on Friday. Separately, the of Music Broadcast Ltd, the operator of FM radio channel Radio City, was subscribed 27 times as of 1025 GMT on the final day of bidding.

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Avenue Supermarts IPO sails through on Day 1 of bidding process

While there are no direct comparable, companies like V-Mart (40 times P/E on FY17E), Trent (49 times) and Future Retail (34 times) having a significant retail presence are trading at higher valuations. It will conclude on March 10. The minimum bid lot is 50 equity shares and in multiples of 50 thereafter.“At the higher price band of Rs 299, the offer is valued at 36 times P/E and 1.6 times M.Cap/sales on 9MFY17 annualised basis (post-dilution). NEW DELHI: The initial public offer (IPO) of Avenue Supermarts, which owns supermarket chain of DMart, got fully subscribed on Day 1 of the bidding process.Data available with stock exchanges showed that the issue had received 4.46 crore bids by 3.25 pm, which was higher than 4.4 crore shares on the block.The quota for QIBs was subscribed about 1.1 times, non-institutional Investors (NIIs) by 40 per cent and retail individual investors (RIIs) by 1.2 times.The company had on Tuesday raised Rs 561 crore by allotting them 18.76 million shares to 35 anchor investors including the government of Singapore, Fidelity, TRowe Price and JP Morgan, among others, at Rs 299 apiece.The Rs 1,870 crore issue is being sold in the price band of Rs 295 to Rs 299 per share. Given ASL’s strong fundamentals, high growth, focused approach to cluster based expansion with ownership model and robust supply chain management, the offer seems to be at reasonable valuations,” said Centrum Broking.Another brokerage Reliance Securities noted that the company has delivered strong performance in the past few years with average Same Store Sales (SSS) growth of 24.4 per cent over FY12-16, along with four-fold growth in revenues and more than five-fold growth in net profit during the same period.“Considering the strong management bandwidth, high operating efficiency and superior financial performance coupled with attractive valuations, we strongly recommend subscribe to the issue,” the brokerage said.The company has total debt of Rs 1,240 crore at the end of 9MFY17, which is expected to reduce by Rs 1,080 crore over FY18-20, said KRChoksey in another note.“This, in turn, could result in the company to stand at almost debt free level, which could improve return ratios further going ahead,” the brokerage said.Angel Broking believes that Food & Grocery (F&G) still has lower penetration compared with other categories like apparel & accessories, footwear, jewellery & watches and consumer electronics and increased penetration in this category will benefit the organised players such as DMart.“Better RoE profile, promoter’s strong background, strategically located stores, intense focus on maintaining lower costs and strong brand perception are the compelling factors indicating that ASL is a long term story that will unfold going ahead.”